Gabriel Rodríguez-Puello

Digging for Trouble? Mining Booms, Local Economic Shocks, and Criminal Behavior​​

Decades of research link natural resource booms to social disorder and rising crime, forming part of the so-called “resource curse”. This paper challenges that view by showing that, once compositional changes are accounted for, resource booms can instead reduce criminal behavior. I study the 2004 iron ore boom in Sweden as an exogenous shock to local economic conditions, combining geocoded administrative data on all criminal convictions and demographics from 2000–2015 with a difference-in-differences design. Comparing residents in the mining municipality to those in similar nearby municipalities and exploiting variation in distance to the mines, I distinguish long-term residents from in-migrants to separate genuine local effects from population changes that bias aggregate analyses, and provide new micro-level evidence on how improved labor market opportunities affect individual criminal behavior. Results reveal a 19% reduction in criminal activity among residents during the boom, driven by young, low-educated males employed in the manufacturing, construction, and service sectors. Effects are strongest within 20 kilometers of the mines and are driven by first-time offenders rather than recidivists. These findings overturn the prevailing resource-curse narrative and support rational crime models where improved labor market opportunities increase the returns to legal activity. The evidence indicates that the “resource curse” arises from aggregation, which hides the heterogeneous behavioral adjustments of individuals to local economic shocks. (JEL R11, K42, Q33, O13)